The public sector often invests in large projects in different sectors, such as education, health care and infrastructure. It can be argued that investment appraisal process in these projects should differ from conventional approaches due to the complex interests the public sector holds, which often implies that several aspects need to be considered. Conventional techniques may not suffice and therefore this thesis aims to investigate the applicability of real options analysis and multi-criteria analysis in a combined approach. The study is conducted in the form of a case study at publicly owned Sundsvalls Logistikpark, where options in the form of the utilization of development areas and the non-monetary aspect reduction of carbon dioxide are included in the appraisal. The model developed compares two alternative strategies where one is based upon conventional usage of the area and the other represents the environmentally friendly alternative. The results show that including the value of flexibility in the appraisal significantly raises the initial valuation, whereas the comparison of the strategies show that the results either details which strategy is preferred, if input to both strategies are available, or where the threshold for indifference lies. It is concluded that this model is applicable in terms of its ability to capture the value of flexibility and inclusion of several aspects of the decision problem. However, it is also concluded that the numerous simplifications made may lead to unreliability in the results, and the process of obtaining accurate input may time-consuming, depending on the case. The usability of the model is high in terms of its potential, but lower in terms of the knowledge-based threshold required of the user.

Although IS studies have begun to recognize the role of emotion in decision making, the research in this area is still in its infancy. The exploration of IS decision making phenomena through the lens of regret can offer rich implications to both research and practice. The presence of regret, for instance, can explain how and why IS decision makers choose a certain option. Motivated by the gap in the literature, the three papers in this dissertation investigate the role of regret in decision making in IS contexts. Specifically, the three projects investigate the following: IT real options decision in the context of RFID investment in libraries, whistle-blowing decision in the context of violations of heath information privacy, and process documentation decision in the context of investment in process improvement initiatives in an IT project. The contributions and implications of the three studies are presented further.

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Many of the grid compute resources (CPU cycles, network bandwidths, computing power, processor times, and software) exist as non-storable commodities, which we call grid compute commodities (gcc) and are distributed geographically across organizations. These organizations have dissimilar resource compositions and usage policies, which makes pricing grid resources and guaranteeing their availability a challenge. Several initiatives (Globus, Legion, Nimrod/G) have developed various frameworks for grid resource management. However, there has been a very little effort in pricing the resources. In this thesis, we propose financial option based model for pricing grid resources by devising three research threads: pricing the gcc as a problem of real option, modeling gcc spot price using a discrete time approach, and addressing uncertainty constraints in the provision of Quality of Service (QoS) using fuzzy logic. We used GridSim, a simulation tool for resource usage in a Grid to experiment and test our model. To further consolidate our model and validate our results, we analyzed usage traces from six real grids from across the world for which we priced a set of resources. We designed a Price Variant Function (PVF) in our model, which is a fuzzy value and its application attracts more patronage to a grid that has more resources to offer and also redirect patronage from a grid that is very busy to another grid. Our experimental results show that the application of the PVF has helped achieve equilibrium between users satisfaction measured as QoS and recovery of the infrastructure investment made by the providers. In the absence of pricing benchmarks, we setup Commodity Base Prices (CBP) and then integrated our PVF and CBP with GridSim to price grid compute resources. In summary, this thesis provides the design of a model to price grid compute resources using financial options theory. The model achieves mutual benefit for users and providers in the grid environment. The mutual benefit is expressed in terms of QoS to the users and recovery of investments on the grid infrastructure for the providers. This thesis has opened up many different opportunities for further research especially in the era of enterprise computing with clouds.

Real options analysis has been recommended to identify and quantify opportunities where managerial flexibility can influence worth. However, real options models in the literature have become increasingly sophisticated, and managers have cited their reluctance to use such models due to their level of complexity and lack of transparency. Presented in this thesis is a real options model that can be easily incorporated into the current project selection methodology of a firm; the model uses managerial cash flow estimates to price real options on tangible investment opportunities in a financially consistent manner. Next, to demonstrate the application of real options analysis in practice, five real options models, including the proposed model, are applied to value a medical device project. The models all price the real option differently, due to the differences in their underlying assumptions, but they all yield the same investment conclusion: the medical device project has value.

Real options analysis has been recommended to identify and quantify opportunities where managerial flexibility can influence worth. However, real options models in the literature have become increasingly sophisticated, and managers have cited their reluctance to use such models due to their level of complexity and lack of transparency. Presented in this thesis is a real options model that can be easily incorporated into the current project selection methodology of a firm; the model uses managerial cash flow estimates to price real options on tangible investment opportunities in a financially consistent manner. Next, to demonstrate the application of real options analysis in practice, five real options models, including the proposed model, are applied to value a medical device project. The models all price the real option differently, due to the differences in their underlying assumptions, but they all yield the same investment conclusion: the medical device project has value.

The major challenges in sustainable implementation are the financial issue and uncertainties. The traditional financial budgeting approach that is commonly used to evaluate sustainable projects normally neglects future decisions that might need to be made over the course of a project. The real options approach has been suggested as a tool for strategic decision making because it can provide flexibility which can increase the project value. Researchers have been trying to identify the potential of the real options approach, and provide the frameworks for a real options evaluation and flexible strategy in sustainability improvement. However, some important variables and financial impacts explanation of real options are missing. Models can be improved to show the variation of possible project values along with its behavior. This work aims to improve the real options model in sustainable projects to provide understanding about the financial impacts of flexible strategy to sustainable improvement projects and to be used as a tool to assist decision making. The results showed that real options can have a positive financial impact to the project. The extension of this model can assist the analysis and development of decision policies.

This thesis examines the relationship between equity valuation and four value drivers: revenue growth, volatility, profit margin and competitive advantage. It is motivated by evidence that the predominant valuation techniques of equity analysts are not associated with improved portfolio performance. Prior research suggests that equity analysts devote considerable resources into forecasting near-term earnings, but derive target prices from those earnings in an almost arbitrary fashion. In contrast, the valuation techniques in the commercial world are increasing in sophistication. Around 30 percent of large corporations in the United States and Australia use real options analysis for project evaluation, according to recent surveys. Thus, the research question is whether sophisticated equity valuation, based on rigorous economic assumptions, is useful for investment decision-making.

Thesis (Ph. D.)--University of Oregon, 2007. / Typescript. Includes vita and abstract. Includes bibliographical references (leaves 109-114). Also available for download via the World Wide Web; free to University of Oregon users.

Diss. Stockholm : Handelshögskolan, 2003.